IBA urges govt to provide concessional electricity tariff for CBG plants

Indian Biogas Association (IBA) has urged the Ministry of Petroleum and Natural Gas to provide a concessional electricity tariff for compressed biogas (CBG) plants to boost the clean energy transition.

In a comprehensive submission to the ministry, IBA stressed that the cost of electricity is a significant operational expense, averaging 30 per cent of overall OPEX, ranging between 20 per cent and 48 per cent, based on the feedstock used and the scale of the plant, an IBA statement said.

According to the statement, IBA has suggested that the government should grant concessional electricity rates to CBG plants, which are at a disadvantage due to high industrial electricity charges that account for as high as 48 per cent of their running costs.

The association's detailed cost study indicates that at an average industrial tariff of Rs 7 per kWh, electricity takes up a significant portion of the overall operating costs of commercial-scale CBG plants, like 34 per cent in paddy straw-based plants, 28 per cent in press mud-based plants, 19 per cent in cow dung-based plants, and as high as 48 per cent in Municipal Solid Waste (MSW)-based plants.

IBA's suggestion to the ministry to shift from applicable industrial tariffs for electricity (average rate of Rs 7 per kWh) to domestic tariffs (Rs 4.5 per kWh) would provide significant cost savings across all categories of feedstocks, and this tariff reform would make the sector much more operationally viable.

IBA Chairman Gaurav Kedia said, "The CBG industry is a keystone in achieving India's Panchamrit commitments announced at COP26. By easing the cost burden of electricity for CBG plants, we can drive our 50 per cent non-fossil energy transition by 2030 and underpin our Net Zero emissions goal by 2070. With one such policy measure, we can reverse the economics of clean energy manufacturing and bring much-needed private capital to scale the sector across the country".

The grouping underscored that high industrial tariff rates now function as a structural hindrance, having a direct bearing on profit margins and cash flows, especially in the most important formative years, when projects are consolidating.

Financial pressure deters new market players from entering and hinders the expansion of existing units.

The concessional tariff offer is set to enhance sector competitiveness, trigger private participation, and facilitate smoother integration of CBG into India's energy mix, supporting the government's wider clean energy transition goals, it stated.

IBA is the first and largest professional biogas association for stakeholders in the biogas industry, including technology providers, project developers, plant operators, planners of biogas plants, and representatives from public policy, science and research in India.

The association was established in 2011 and revamped in 2015 to promote a greener future through biogas. The motto of the association is "propagating biogas in a sustainable way".